Is Even Live Sports Vulnerable in the Digital Age?

I was struck today by a Washington Post story by Cecilia Kang and Will Hobson that considers the potential impact of new apps like Periscope (owned by Twitter) and Meerkat on the highly lucrative live-sports media sector.

Noting that its “live” aspect has largely protected televised sports from piracy and other digital-age erosions of control, Kang and Hobson suggest that this protection now faces a challenge from these new apps:

Just hold a smartphone up to a television to record and stream what’s airing, and suddenly piracy is easier than ever. That stunning recognition arrived this past weekend when droves of boxing fans skipped the $100 pay-per-view fee and watched the much-anticipated match between Floyd Mayweather Jr. and Manny Pacquiao free Saturday evening. Dozens of live streams of the fight were available through Periscope, and even though the app shut down 30 illegal streams, users gloated about their ability to watch…

“One of the challenges now is just the logistics of managing the takedown process. . . . We’re talking about real-time activity. Taking something down in half an hour may be half an hour too late,” said Douglas Masters, an intellectual property lawyer at Loeb & Loeb in Chicago.

Though they point out that “[m]edia firms say the onus should be on Periscope and similar apps to police themselves,” Kang and Hobson also note that:

Twitter, which owns Periscope, required HBO and Showtime, who co-produced the pay-per-view telecast, to alert it to illegal streams of the Mayweather-Pacquiao fight. Only then did it take down those accounts.

The article also makes clear that, while these apps have yet to significantly impact their business, major sports content providers are beginning to take seriously the potential impact of this emerging “live streaming” trend. And, given the huge amounts of money involved, I’m pretty sure they’ll be putting increasing pressure (including legal action, as necessary) on these new live streaming apps and, in the case of Periscope, it’s corporate owner Twitter. As the article suggests, Twitter is increasingly involved in content hosting and other business arrangements with cable networks and sports leagues, and will probably not want to jeopardize these relationships by being too closely tied to technologies that seriously threaten the latter’s revenue stream.

That being said, the introduction and expanding use of these live streaming apps are yet another development suggesting that the massive financial power of live sports media may finally be experiencing at least a little of the disruption and revenue erosion the rest of the traditional media industry has already been grappling with in the digital age.

Other efforts to move in this general direction include:

Dish Network’s Sling TV streaming service, which includes ESPN and other sports channels (but no local broadcast stations), and charges only $20/mo. It reportedly had technical problems supporting the massive streaming demand generated by Final Four basketball games, which suggests that it may need to either reduce its (probably already thin) margins to support higher streaming demand, increase its monthly rate, or find ways to charge extra for some sporting events.

Verizon’s new “customized TV” channel-tiering option, which allows non-sports fans to avoid the high cost of sports programming, and has already faced a legal challenge from ESPN, which claims the move violates the two companies’ contract.

Verizon and cable operators reportedly pay more than $6/mo. per subscriber to carry ESPN. While offering tiers or a la carte options can free non-sports fans of this financial burden (plus whatever margin operators add to their own cost), Michael Nathanson, of MoffettNathanson Research estimates that ESPN would cost a whopping $36.30 per month in an a la carte world.

As someone who hasn’t watched a lot of sports since I was a teenager, I’d be OK with this model, though some of my friends and colleagues might not be very happy with it. But perhaps we can all agree that some shaking up of the status quo in sports programming is a potentially healthy development, especially if it keeps more dollars in consumers’ pockets and less flowing to an industry marked by substantial cartelization and monopoly power (in both professional and college sports).